Success of China influenced India: RAND

WASHINGTON: The success of China influenced India to give up its protectionists trade policies and showed that abandoning the old hostility to globalization could lead to prosperity, said a RAND Corporation analyst.

China's globalization success has profoundly influenced its neighbors. India has learned from China the advantages of a more open economy, William H. Overholt, Director of RAND's, Center for Asia Pacific Policy, told the U.S.-China Economic and Security Review Commission.

"Since independence, India's economy has been hobbled by extremely protectionist trade policies, and antagonistic stance toward foreign direct investment, and a remarkable network of domestic socialist economic controls called the license raj," he said "A 1991 foreign exchange squeeze and neighboring China's success shocked India and also showed that abandoning the old hostility to globalization could lead to prosperity," he said.

While India started later than China and moved slowly, its economic growth rates have doubled. The number of people in absolute poverty has declined sharply and exports have boomed and foreign exchange reserves are ample, Overholt said.

Calling the global community including U.S. to welcome China's emergence as a global power, he said, "Chinese policies were inspired by the U.S. exhortations and example, they pose no threat to anybody except for the Taiwan problem which has to be resolved." "China has effectively become an ally of U.S. and Southeast Asian promotion of freer trade and investment than is acceptable to Japan, India and Brazil."